Barry Diller isn’t merely convinced of the viability of Internet advertising. The Chairman and CEO of IAC/Interactive Corp. is psyched, hyped, juiced, pumped.
In a conference call discussion about the plan to split his far-flung conglomerate into five companies, Diller yesterday sounded like a child on Christmas Eve, especially when he discussed Internet advertising.
“What makes me think it’s valid?” asked the mogul. “Everything I see, hear, know, read and think... Right now, video advertising is about 3 percent or 4 percent of a big ad pie. Well, I promise you one thing: It ain't going to stay there at that level very long. It’s going to grow... I couldn’t imagine a sector that has more wind at its back than online advertising.”
In addition to dividing IAC's disparate businesses into five publicly traded companies, the company announced a new, five-year pact with Google for sponsored listings. Diller said the agreement would bring it in excess of $3.5 billion.
As outlined, the split-up plan calls for leaving the Internet and advertising-related entities intact under IAC's banner. The new IAC will be made up of 40 Web-related companies and investments, including Ask.com, Match.com, iWon, Zwinky, Evite, Excite and Citysearch.
Another new company, HSN, will include retailing entities HSN TV, hsn.com and Cornerstone Brands' catalogs, Web sites and stores. Ticketmaster will stand alone as a company that includes other ticketing-related businesses, including Admission.com, TicketWeb and others. Interval International will become its own company and will include CondoDirect, Resort Quest Hawaii and VacationSource.com. And all IAC's current real estate businesses will be gathered into a company called LendingTree.
Under the plan, Diller will continue as chairman and CEO of IAC. The other companies' current CEOs and presidents will remain in their positions as well.
Diller said the need to separate the companies was apparent to anybody attempting to describe IAC. You’d need a building as tall as the Empire State Building to make a sufficient elevator pitch.
“No matter how we say it, and I’ve been saying it for years, it’s a very long series of paragraphs,” said Diller. “It cannot be said in single sentence. There are over 60 brands... It’s confusing to any constituent and it’s certainly confusing to the market.”
In a statement announcing the spin-off plan, Diller said the company needed its brick-and-mortar and other traditional business units to help the fledgling Internet entities gain a foothold. But those crutches are no longer necessary.
“One of the reasons we’ve stayed with some of our more transactional businesses is that we needed their earnings to allow us to invest in emerging Internet businesses,” said Diller in the statement. “Now that we have real scale in the pure Internet units, it makes nothing but sense to me to reorganize the whole.”
Diller said he began thinking this summer about splitting-up the company. It was an idea that wouldn’t fade. “It was just stepping back and saying, `What should we do?’” he said. “I thought it was a great, refreshing challenge. I was as surprised, as was everybody, when we came to the conclusion as quickly as we did. I was up and down... but I just got stronger and stronger about it every day.”
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March 19, 2014